Job protection, industrial relations and employment
In a dynamic stochastic monopoly union model we show that firing costs have a small and ambiguous impact on the level of employment if the union precommits to future wages. Further, in comparison with the commitment equilibrium and for very general union preferences, the no-commitment equilibrium exhibits higher wages and a lower employment level. Since commitment-like equilibria are more likely in cooperative bargain environments, these results suggest that, coeteris paribus, the interaction between employment protection and the quality of industrial relations reduces unemployment. We provide evidence on OECD countries which is consistent with this predictions.
|Date of creation:||Oct 2007|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.unicatt.it/Istituti/EconomiaImpresaLavoro|
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- Modesto, Leonor & Thomas, Jonathan P., 2001.
"An analysis of labour adjustment costs in unionized economies,"
Elsevier, vol. 8(4), pages 475-501, September.
- Modesto, Leonor & Thomas, Jonathan P., 2000. "An Analysis of Labour Adjustment Costs in Unionized Economies," IZA Discussion Papers 225, Institute for the Study of Labor (IZA).
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